Will Corrections Corp. get punished?
Corrections Corp. of America is at a multi-year high, and
traders are bracing for a pullback in the prison operator.
optionMONSTER's Depth Charge tracking program detected the purchase of more than 3,300 November 32 puts for $0.30 and $0.35. The volume is more than 150 times higher than the open interest of just 22 contracts at the beginning of the day, indicating that new positions were initiated.
The investor now has the right to sell CXW for $32 on expiration two weeks from now, no matter how far they drop. He or she may be a shareholder looking to hedge a long position, or they could be speculating on a drop, looking to profit from the inverse leverage generated by the puts.
CXW is down 1 percent to $34.82 this afternoon but is up more than 70 percent so far this year. Earlier in the session, shares of the prison operator touched $35.50, a level not seen since late 1999.
Today's put buying comes with the company scheduled to release quarterly results next Thursday. The last report in August beat expectations on the top and bottom lines.
Overall option volume in the name is quadruple the daily average. Puts outnumber calls by 60 to 1, a reflection of the session's bearish sentiment.